After the closing bell Tuesday, Snap Inc.
SNAP, -1.53%reported a net loss of $443 million, worse than forecasts, on revenue of about $208 million that also fell short of expectations. The result was a deep selloff that pushed the company down as much as 20% after hours, and pushed shares down 50% or so since their March IPO.

Yes, those deep losses are only getting deeper as the company spends on growth efforts. Pair that with a miss on Wall Street’s top-line target, and the picture is incredibly disturbing. We’ve seen this movie before, of course, with Twitter Inc.
TWTR, +1.64%
riding a string of disappointing reports and unprofitable quarters to similar trouble in the wake of its own public offering.

Still, impatience and short-termism shouldn’t fool investors into thinking that Snap is dead. The $15 billion social media giant is indeed seeing real headwinds, but is hardly in danger of disappearing anytime soon.

There are big reasons to be wary of how Snap will perform in the coming weeks. But here are seven reasons why long-term bulls can take heart, and have confidence that this tech firm will indeed be around for a long time.

Dominance in teen and tween audiences: One of the biggest bull cases for Snap is its popularity. For example, a recent eMarketer report showed Snapchat was outpacing Facebook
FB, +1.08%
-owned Instagram among users in both the 12-to-17 and 18-to-24 age groups — a big sign of both current appeal and future potential if it builds brand loyalty among young consumers.

A commitment to broaden the appeal: Of course, the big bombshell dropped by CEO Evan Speigel on the earnings call was that the company is not resting on its laurels with dominance among younger, tech-savvy users. “One thing that we have heard over the years is that Snapchat is difficult to understand or hard to use, and our team has been working on responding to this feedback,” Spiegel said. “As a result, we are currently redesigning our application to make it easier to use.” That nod toward accessibility is a big step toward broadening Snapchat’s already significant appeal.

Stock price reflects struggles with Wall Street, not users:Of course, connecting with users is very different from connecting with gray-haired stock analysts. Snapchat has struggled mightily since its spring IPO thanks to a string of self-inflicted wounds during each subsequent earnings season — including comparing ascendant rival Facebook to stodgy old Yahoo, and a non-answer last quarter that irked one analyst in a public way. But short-term reactions on Wall Street aren’t the ultimate arbiter of long-term success, and there are plenty of execs that struggle to connect with investors but still manage to build successful companies.

Lower targets aren’t a death knell: If you look past some gloomy headlines about recent downgrades, you’ll see that targets have moved down but are hardly predicting disaster. For instance, Oppenheimer cut its price target to $14 but maintained its “outperform” rating. RBC cut its rating from “outperform” with a $20 target to “sector perform” with a $15 target. Stifel Nicolaus downgraded the stock from “buy” with an $18 target to “hold” with a $13 target. Keep in mind with shares just under $13 as of this writing, none of those predictions sound like Wall Street is expecting a collapse — just less potential upside than previously thought.

Tencent’s big investment: Even though this was overshadowed by the earnings news, recent investments from China’s Tencent Holdings Ltd.
TCEHY, +1.10%0700, -1.35%
— revealed in filings earlier this week — showed a big vote of confidence in the firm. Admittedly, Snap is structured in a way that even big investors get zero voting rights if they own Class A shares like the ones the Chinese tech giant purchased. However, the major investment is assuredly a sign of confidence as it brings Tencent’s stake up to 12%. That could be a prelude to a deep partnership if not an eventual acquisition.

Snap leadership and balance sheet is safe: Those nonvoting shares ensure there won’t be any shortsighted restructuring anytime soon. The founders are firmly in charge with a long-term vision, and there’s little Wall Street can do about it. And with even though it’s losing money, Snap is still well capitalized with roughly $2.8 billion in cash and investments. These facts show this isn’t a company on the brink of a crisis in the next few months or even the next few years.

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